While most hedge funds surged back into the black in 2009 after a miserable 2008, FX Concepts suffered another tough year. But the world’s largest currency hedge fund has bounced back, posting its best year in four last year.

The $3.2 billion Global Currency Program jumped 12.53% in 2010, Bloomberg News reports. It’s the New York-based firm’s best year since 2006, when it added 18.58%, and a welcome relief from 2009, when it lost 17.9%.

Firm founder John Taylor said FX made its money betting on the euro over the dollar in the first half and reversing that bet in the second half.

The returns could have been better but for the Federal Reserve’s decision in late August to begin another round of stimulus.

Fed Chairman Ben Bernanke “basically said in August he was going to flood the world with dollars,” Taylor told Bloomberg. “At that point, we were positioned almost entirely long dollars, and it took up about six days to reverse our position.”

Long-term, Taylor said he expects the dollar to make a big run against the euro, which he called “still really, really terrible,” but not until the second half. Until then, “a good trade is short the euro and long the Australian dollar.”

The euro, currently trading at about $1.34, could sink to parity with the greenback this year, Taylor said.

“In the second quarter, when we expect to go long the dollar, it would likely be against the commodity currencies,” Taylor said. “When all of a sudden the U.S. stops printing the money, the commodity gains are going to end. We could see another commodity tumble.”

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